Looming Student Loans

Ok, I’m running a little late… according to my weekly outlook, I should have posted this last week!  Opps.  Life is a balancing act and sometimes you have to drop one ball.  Luckily, I have some time this weekend to pick that ball up and throw it onto the blog.  I finally get to share about this constant bug in my head… student loans.  I’ve been wanting to write about this for months since I graduated with my Masters in December, and it affects our family finances, plus it’s a big topic of concern for the young college generation today.

Like many other post-grads in this country, I am strapped with tons of student loan debt.  This year, the average student graduates with $25,250 of student loan debt and private student loans average around 9% for interest rates. Based on these average numbers, students would be looking at a monthly payment of about $319.86.  And to top that, if you went for a higher degree in graduate school, you’ll have around $43,524 in debt when you’re done (that’s me).  AND I heard on the radio yesterday that the nation’s student loan debt is 1 trillion dollars.  That’s more than all this country’s credit card debt, combined!  Which irks me because all driven and motivated young professionals of tomorrow are paying bills just as big as the shopaholics out there maxing out there cards on frivolous materialistic items.

College Debt

Luckily, there is a light at the end of the tunnel… and a reason to all this madness of getting into tons of debt.  A higher degree means more earning potential.  A Bachelor’s degree position pays $26K/yr more than a high school diploma position.  A Masters? $15K more than that.  (source) So, it’ll all be worth it in the end, right?  Well, when we get to the end… whenever that will be.  I feel like I keep chipping away and with interest, it doesn’t seem to make a dent.

However, I’ve been doing this (paying off my loans) for 3-1/2 years now, so I’ve learned a thing or two.  I keep chipping away, and when I can, throw money at a loan and eventually pay it off..which feels AMAZING!  Here’s a few tips/tricks I’ve learned along the way…

  1. Consolidate.  Six months after you graduate, your student loans will kick in.  The best way to address the many loans you’ve accumulated over the semesters of school is to first consolidate them.  This gives you one payment, and one place to pay them.  That way you don’t forget about one and it allows you to easily prepare for one monthly payment.
  2. Automate & forget them.  By setting up an automatic payment with your bank, or thru their online servicing (Sallie Mae has this feature), you ensure the payments are made on time.  You never forget a payment which means no late fees!
  3. Lower Your Interest Rates.  Most loan companies knock off a percentage of your interest rate for setting up automatic debit or going paperless.  Check out what savings options are offered to you.
  4. Pay off Higher Interest Loans First. Now that you know how much you’ll be paying every month, throw a little extra $$ to the higher interest loans, so in the long run, you’ll pay less interest on them.  I recently had one loan down to $500 and paid it off.  Had I kept making the minimum payments on it, years later when I would have paid it off, I would have paid $720.
  5. Claim Interest on your taxes.  Don’t forget to claim the interest you’ve paid on your loans on your taxes!
  6. It’s Good Debt.  Remember although student loans can be daunting and you feel like they’ll never get paid off, they are good debt.  If you keep paying them off on time, your credit builds.  But remember that it will affect other purchases.  When we bought our house we had to supply all the info on our student loan debt, which affected how much of a mortgage we could afford.

I’ll end this little rant with some exciting news… I paid off another loan!
loan paid off
Do you have student loans?  What are some tips/tricks you’ve learned to help pay them off?

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9 thoughts on “Looming Student Loans

  1. Good advice. I am sitting with $80K in student loan debt with a bachelor’s and it is awful. Half of my salary goes directly to student loan payments. I am working hard to throw extra money at my loans when I can but with monthly payments that high it is difficult. I dedicated a blog to how I survive my debt on a teachers salary at collegeloanstress.com, There I have a bunch of survival strategies that I use daily.

    • Thanks for stopping by! Your blog looks great – Very informative. I don’t know how you keep up with paying off your loans… I’ll have to pop by more and read how you do it 🙂

  2. great tips! And its funny you posted on this because I just checked my balance the other day. I feel like i have been paying student loans forever! I hate that its still there and at the rate i am paying, won’t be gone for another 3-4 years! BUT i can’t complain seeing as I only have $8K left to pay off when others have a whole lot more. I have always paid an extra $40 a month because I can afford to. Luckily my interest rate is very low…2.6%. I would much rather pay off my car first since that has a higher interest rate and a monthly cost of $350 per month. Congrats for paying another one off!

    • You’re smart to payoff your car first, as it’s interest rate is higher. Very smart! You’re lucky to have low interest rates on your student loans – some students are getting 9% or higher today. I have low 2-3% ones from undergrad, but my recent grad school loans are at 6.5%, and I have perfect credit! Keep plugging away at them and they’ll dissapear, someday. My goal is to have them paid off by my 30th b-day. I have just over 3 years to do it… HA. Practically impossible, but I can try 🙂

  3. Congrats on paying another off! That must feel so great! I was very fortunate that my parents paid for all of my college expenses, but my husband had some student loan debt when he graduated. He always paid as much as we possibly could on it and managed to finish it off a few years after graduating. It was a great day when he made that final payment! You’ll get there soon!

    • Thanks for the encouragement, Adrianne. We don’t want Avery strapped with student loans like me, so we already have two college funds started for him! Who knows how expensive college will be when our kids go!?

  4. I had 17k that has been paid off long time ago. My parents owned a restaurant. And in exchange for food schooling, I worked without a salary for over 10 years. Fair enough…lol.

    Congrats on another loan paid. Another suggestion is paying weekly or biweekly if they allow it. Because the interest accrues on your priniple, the sooner you make a payment, the more money you save. You can still make the same payment amount, but by breaking it up you pay less on accrured in
    terest.
    I used to be in the loan biz. So glad I left the field… Serenity now. Lol

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